Amitendu Palit

Growth of Special Economic Zones (SEZs) in India

Zones are popular instruments in developing countries for pursuing export-led growth strategies. Developing countries have built zones as models for selective policy applications and for easier integration into the world economy. India is not an exception. However, the recent Special Economic Zones (SEZs) that have come up following the SEZ Act of 2005 have created several controversies. These include concerns over accentuation of economic divides and industrial relocation. This article examines the rationale behind zone-based growth strategies and studies the international evidence on zones. It also looks closely at India’s earlier and current experience with zones. It finds that India’s new SEZs are following specific locational patterns on account of discriminatory incentive structures that are also inducing distinct product-orientations in these zones.

India’s Economic and Strategic Perceptions of China’s Maritime Silk Road Initiative

ABSTRACT The Maritime Silk Road Initiative (MSRI) is a part of China’s experiment in scaling up economic corridors across vast swathes of diverse economic geographies. China’s involvement in a large number of ongoing transport corridor projects has encouraged it to embark on the most ambitious of them all till date. The heterogeneity among the economic capacities and integrations of various regions constituting the MSRI, particularly in efficiency of infrastructure and ability to trade, is noticeable. This article underscores these variations as important determinants of competitiveness of the constituent regions and countries. India’s perceptions of the MSRI are significantly shaped by its lack of quality maritime infrastructure capacities that make it relatively uncompetitive vis-à-vis China, Europe and most of Southeast Asia; and the impression of the MSRI’s “China-centrality” emanating from lack of mention of non-China regional forums in the Chinese government’s vision statement; and absence of proactive measures from the Chinese leadership in establishing the MSRI’s multi-country character. The article argues that it is important for India to appreciate the geopolitical character of this unprecedented infrastructure initiative, which, while emphasizing Chinese interests, might not be inimical to India’s economic ambitions, provided India is able to address its domestic infrastructure imperatives.

TPP and Intellectual Property: Growing Concerns

Promoted as a high-quality twenty-first century trade agreement for the Asia-Pacific, the Trans-Pacific Partnership (TPP) has generated concerns over several WTO plus issues it is negotiating. This article examines the concerns on intellectual property rules with respect to patents and copyrights. While large emerging markets like China and India are not part of the TPP, growth of a rigid intellectual property regime as proposed by the TPP in the Asia-Pacific, will have several implications for them, particularly in innovations and production of generic pharmaceuticals, as discussed by the article.

India-China Trade: Explaining the Imbalance

The paper examines the competitiveness of Indian exports in the Chinese market as a key factor in explaining the imbalance in Indo-China bilateral trade. Examination of such competitiveness vis-a-vis similar exports from the ASEAN countries show Indian products to be competitive in only select segments, while ASEAN exports are competitive in most. The lack of market access for Indian exports due to low competitiveness is further accentuated by the more exhaustive FTA between China and ASEAN.

The MSRI, China, and India: Economic Perspectives and Political Impressions

China’s ambitious connectivity plan of linking Asia and Europe through an integrated network of land and sea routes has significant economic and strategic implications for India. The chapter examines these in regards to China’s MSRI. It specifically analyzes the MSRI as an economic corridor, along with variations in its economic geography through regions that have varying abilities to exploit emerging opportunities, and contemplates the related impressions of Indian business and government. The chapter reviews the likely impact of regional frameworks on the MSRI and the concomitant influences on Chinese and Indian business perceptions arising from political-economic complexities in trade rules. It further examines the MSRI in the context of China–India bilateral economic relations and identifies the conditions necessary for India’s successful integration into the connectivity plan.

India–EU Industry Value Chains: Perspectives and Evidence from Textiles and Software Industries

As production in various industries has become more and more vertically integrated across geographies, several regions of the world have gained importance for specific industries in terms of their participation in regional and global value chains. Value chains of various industries involve India and the European Union (EU) at various stages. This chapter concentrates on two industries whose value chains run through the EU, namely: software and textiles, attempting to unravel the nature of integration for both the industries. Innovation achieved in either industry as a result of the value chain integration and its influence on the industry are analysed. Highlighting the lessons learnt through the evolution of these value chains, the chapter concludes by specifying some challenges for the industries and the importance of skill development to ensure that India can grow its comparative advantage and penetration in the value chains of these industries.

Mega-regional trade agreements and non-participating developing countries: Differential impacts, challenges and policy options:

Mega-regional trade agreements imply several challenges for developing countries. Some are due to the impacts of economic growth within areas of new discriminatory preferential access, while others are produced by the long-term implications of mega-regional trade agreements on global trade governance. These challenges are likely to increase as more mega-regional trade agreements with large economic size, regulatory ambition and geo-strategic significance are negotiated and signed. The implications of these challenges are significant for developing countries outside the mega-regional trade agreements, particularly the least-developed countries. This paper examines some of the major challenges from mega-regional trade agreements for non-participating developing countries, with attention to the drivers of these agreements, their economic impacts, the difficulties encountered by the World Trade Organization following emergence of mega-regional trade agreements, and possible strategic responses to these trade agreements. Underlining the differential impacts of mega-regional trade agreements on non-participating developing countries, the paper concludes that larger economies like China and India are likely to be less affected due to their economic size and strategic influence, compared with the least developed countries.

Examining the Regional Imbalance in China: Comparison with India

In the ninth chapter of this volume, the author carries out a cross-country analysis of India and China, the two giants of Asia. Having several common issues and threats between India and China, such comparative analyses can meaningfully provide inputs to India’s policy process. It is being argued that in the post-reform periods, both the nations have been facing very high regional disparity in their development. The socio-economic costs of a sustained divergence in income between their leading and backward regions have become a major policy challenge in development. The chapter therefore is significant, and explicitly highlights how regional imbalance in China has remained conspicuous, notwithstanding a conscious shift in development strategy towards balanced growth for several years. In spite of extensive state efforts to increase investment in the backward regions, economic activity remains sluggish in these regions, constraining growth of new income generating and earning opportunities. The author shows a clear comparative advantage in production in coastal areas. Specific development strategies are not easy, given that the Chinese economy has become far more market-oriented and globally integrated than what it was during the early years of economic transition. Under the current circumstances, state efforts and emphasis are not eliciting the desired response from the market forces. Furthermore, regional development strategies like the Go West, and the Western Development Strategy are producing partial outcomes that are accentuating intra-regional disparities and aggravating overall imbalance by expanding rural-urban differentials. This according to the author is an important lesson for India and other emerging economies that are also grappling with the challenge of regional imbalance.

Economic Reforms in India: Perpetuating Policy Paralysis

This paper examines the current state of economic reforms in India and the phenomenon of policy paralysis leading to almost complete lack of progress on reforms. It studies the qualitative aspects of reforms in India over the last couple of decades and explains how these have changed over time. It discusses the role of coalition governments, an increasingly regressive political economy and lack of strong political leadership in fostering the policy paralysis and expects the latter to prevail in the foreseeable future.

Suicides in India: An Alternative Economic Perspective

Suicides in India are steadily increasing over the last two decades. This period coincides with the time during which the Indian economy has achieved high growth and integrated globally through fundamental structural changes. This paper examines the pattern of suicides in the country as revealed by the official statistics and finds the relative shares of suicides to have increased in several prosperous states, which are also the more globalized states. It finds suicides in most of these states, which have high urban income inequality, to be largest among self-employed (others). While farmer suicides show a welcome declining trend in recent years, the increasing tendency of self-employed (others) to take their lives in India’s prosperous states is a disturbing trend. The paper argues that lack of adequate livelihood opportunities, low skills, limited access to formal credit and absence of social security support are precipitating suicides in the rapidly enlarging informal sector of a restructuring Indian economy.